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BSC Panel 195 9 February 2012. Report on Progress of Modification Proposals Adam Lattimore 8 March 2012.

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Presentation on theme: "BSC Panel 195 9 February 2012. Report on Progress of Modification Proposals Adam Lattimore 8 March 2012."— Presentation transcript:

1 BSC Panel February 2012

2 Report on Progress of Modification Proposals Adam Lattimore 8 March 2012

3 2 Modifications Overview New Definition- Assessment P272, P274, P275, P276, P277, P278, P280, P281 Report- With Authority - Authority Determined - Self-Gov Determined -

4 3 Modifications Overview Mod.TitleIWA Assessmen t Report Panel Recommendati on Ofgem Decision Decision By Impl. Date Decision By Fall Back Impl. date P272 Mandatory Half Hourly Settlement for Profile Classes Jun Sep-1211-Oct Feb April Feb Apr- 15 P274 Cessation of Compensatory Adjustments 13-Oct Apr May- 12 P275 Extending BSC Performance Assurance 13-Oct Mar-1212-Apr WDs-- P276 Introduce an additional trigger/threshold for suspending the market in the event of a Partial Shutdown 13-Oct May-1214-Jun-12 P277 Allow Interconnector BM Units to choose their P/C Status 13-Oct Mar-1212-Apr May Feb Sep Jun- 13 P278 Treatment of Transmission Losses for Interconnector Users 13-Oct Mar-1212-Apr May Nov Aug Feb- 13 P280 Introduction of new Measurement Classes 08-Dec Apr May- 12 P281 Change of BSCCo Board of Directors & Chairman 12-Jan May-1214-Jun-12

5 P272 Progression Jonny Amos - Ofgem 8 March 2012

6 5 Progress to date Context On 12 January 2012, the Panel: rejected the modification workgroups recommendation to progress P272 to Report Phase agreed that P272 should stay in the Assessment Process noted that Ofgem undertook to report to Panel at the March 2012 meeting to: –detail any additional information and analysis that should be taken into account –detail a timetable that takes account of related work agreed that the Panel will determine the revised timetable and Terms of Reference Q1 2012Q3 2011Q month workgroup assessment2 month extension =P272 raised=BSC Panel meeting=workgroup meeting

7 6 Timetable of related industry work Related work Q2 2012Q3 2012Q4 2012Beyond BSC P280 DCP 103 MIG Issue 22 Apr 2012 Oct 2012 Apr 2012 Apr 2013 July 2012 Apr 2013 BSC P272 Aug 2012 Apr 2014 Workgroup report to BSC Panel Workgroup report to BSC Panel (proposed) Workgroup report to DUCSA Panel Proposed implementation date

8 7 Promoting smarter energy markets Ofgem is scoping a strategy to shape market development from the platform of smart metering We have identified electricity settlement as one area where changes may be required We welcome the work that industry is taking forward, including through P272 and Elexons Profiling and Settlement Review Group Intention is to respond to consultation in summer 2012 Related work

9 8 Better understanding the impacts of P272 Ofgem, Panel and industry need better analysis on the potential impacts of P272 Our view is that the workgroup should be the vehicle for further analysis, supported by Elexon The objectives of this analysis are to: –better understand and where possible quantify the benefits under a range of scenarios –better understand and where possible quantify costs to the industry of P272 under a range of scenarios –better understand the impact on Profile Classes 1-4 –help Ofgem understand practical implications for consumers Additional analysis

10 9 How Ofgem can help We can provide a steer to help guide the workgroups analysis, covering for example: –potential scenarios for modelling purposes –techniques for managing uncertainty –a potential framework for assessing the costs and benefits We can also facilitate discussions on consumer issues Additional analysis

11 10 Draft timetable of work Next steps MarchBSC Panel meeting AprilWorkgroup meetings – scenarios and assumptions MayIssue consultation – 6 weeks June/ JulyWorkgroup meeting – discuss responses and confirm analysis AugustWorkgroup finalise report SeptemberAssessment report presented to Panel OctoberFinal report sent to Ofgem Ofgem decision by February 2013 to allow industry time to implement if approved

12 195/04 P275 Extending Performance Assurance Assessment Report Melinda Anderson 8 March 2012

13 12 Section Z1.6.1 of the Code states the responsibilities of the Performance Assurance Board (PAB) are owed exclusively to Trading Parties P275 argues that this implies the PAB acts only for Trading Parties This would mean that PAB would not resolve issues for BSC Parties that are not Trading Parties (e.g. LDSOs) even though they rely on Settlement data and processes for a number of business purposes This is not the case P275: Issue

14 13 P275 Group concluded that: Z1.6.1 relates to the ultimate responsibility and liability of the PAB, not the scope of PAB activities In practice the scope of PAB activities is not limited to Trading Parties, but encompasses all Performance Assurance Parties (PAPs) P275 argues it is unclear that non-Trading Parties can try to resolve issues that do not directly impact Trading Parties via the PAB Scope of issue much smaller than set out in proposal P275: Issue

15 14 P275 solution: P275 solution is to add a paragraph to Section Z to clarify the relationship between the PAB and all PAPs with respect to Z1.6.1 Code-only change; scope of Performance Assurance unaffected P275: Solution

16 15 The proposed change is a Code only clarification and therefore implementation does not impact BSC Parties No system or process changes Minimal ELEXON implementation cost (1 man day of effort which equates to £240) Implementation Date: 10 Working Days after approval P275: Impacts, costs and implementation

17 16 Groups majority view is P275 would better facilitate Objective (d) because increased BSC clarity promotes efficiency in the BSC arrangements One Group member did not agree that P275 would better facilitate Objective (d) because the clarification is unnecessary and therefore doesnt increase efficiency The Group unanimously agreed P275 is neutral with respect to Objectives (a), (b), (c) and (e) P275: Applicable BSC Objectives

18 17 Assessment Consultation responses aligned with Groups views Objective (d) only relevant Applicable BSC Objective Majority believed P275 better facilitates Objective (d) because increased BSC clarity promotes efficiency in BSC arrangements Minority did not believe P275 better facilitates Objective (d) because the clarification is unnecessary All respondents agreed the legal text delivers the intent of P275 P275: Consultation responses Facilitates Applicable BSC Objectives? YesNo 43

19 18 Group has discharged its Terms of Reference Group recommends that: P275 is approved ELEXON believes that as the change is now a Code only clarification it meets the Self Governance Criteria P275: Conclusions

20 19 A Modification Proposal that, if implemented: a)Is unlikely to have a material effect on: i.Existing or future electricity consumers; ii.Competition in the generation, distribution or supply of electricity or any commercial activities connected with the generation, distribution, or supply of electricity; iii.The operation of the national electricity transmission system; iv.Matters relating to sustainable development, safety or security of supply, or the management of market or network emergencies; and v.The Codes governance procedures or modification procedures, and b)Is unlikely to discriminate between different classes of Parties Self Governance Criteria

21 20 NOTE Assessment Report; SUBMIT P275 to Report Phase; AGREE views on Applicable BSC Objectives (d): Solution is better than baseline; AGREE provisional recommendation to: Approve P275; AGREE P275 is Self Governance AGREE Implementation Date: 10WD after approval AGREE draft BSC legal text; AGREE that ELEXON issue Report Phase Consultation and Self Governance Statement; and AGREE Draft Modification Report to April Panel meeting P275: Recommendations

22 195/05 P277 Allow Interconnector BM Units to choose the P/C David Kemp 8 March 2012

23 22 Energy that is transited across GB Energy entering GB over one Interconnector assigned to different Account to energy leaving GB over another Not just applicable to transit flows P277: Issue (1 of 2) IFA Moyle 100MW into GB Allocated to P Account Paid SSP 100MW out of GB Allocated to C Account Charged SBP

24 23 P277: Issue (2 of 2) Moyle 100MW generated Allocated to P Account Paid SSP 100MW out of GB Allocated to C Account Charged SBP Energy generated in GB that is exported Energy generated assigned to different Account to energy leaving GB over Interconnector Without ECVN, in net imbalance even though net volume is zero

25 24 Single BM Unit per Interconnector per User Lead Party can elect P/C Status of these BM Units Allows Party to net import over one Interconnector and export over another Volumes would not net to zero, due to transmission losses Solution would be mandatory P277: Solution

26 25 Costs: Central costs: approx. £67k Party costs: IAs/IEAs: up to £100k Interconnector Users: up to £35k Impacts: Interconnector Users, IAs, IEAs and TC CRA and SAA BSC Sections K, Q, R, T and Annex X-1 BSCPs 15, 31 & 65 and CRA SD P277: Impacts and Costs

27 26 Workgroups majority view is to reject P277 Views based on Applicable BSC Objectives (c), (d) and (e) P277: Applicable BSC Objectives (1 of 5)

28 27 Workgroup discussed potential advantages Interconnector Users could gain Removal of notification risk Other Parties are exposed to this risk Unduly discriminatory – wouldnt apply to all Creation of netting benefit Can be done through ECVNs Only benefit if volatile – I/C volumes generally firm P277: Applicable BSC Objectives (2 of 5)

29 28 Creation of consolidation benefit Offset unpredictable volatility Original intent of two-Accounts to avoid this advantage I/C volumes not usually volatile Extent of benefit is uncertain, but likely to be small Workgroup believes P277 is unduly discriminatory due to removal of notification risk for some Parties and not others Believes this regardless of whether potential consolidation benefits are material P277: Applicable BSC Objectives (3 of 5)

30 29 Workgroup considered wider European picture Interconnectors seen as Transmission Trading between countries Trade across intervening Interconnectors – physical position each side Transiting through GB – no overall position? Third Package Intent to remove barriers to cross-border flows P277 could aid European harmonisation – spirit of Third Package No specific requirements around single Accounts Workgroup believes GB arrangements not a barrier to Market Entry P277: Applicable BSC Objectives (4 of 5)

31 30 P277: Applicable BSC Objectives (5 of 5) ABOYesNo (c)Minority: Reduces notification risk Potentially lowers Market Entry barriers No potential for consolidation benefits Majority: Undue discrimination/preferential treatment Negatively affect GB competition Dont believe issue is barrier to Market Entry Possible consolidation benefits in wider portfolio (d)Minority: Reduce complexity and admin effort Wider benefits for one-off implementation costs Majority: Implementation costs for little benefit Issue can be resolved through ECVNs (e)Minority: Help facilitate European harmonisation Could help promote intent of Third Package Majority: Neutral – still too early to measure

32 31 Respondents views mixed Reasons for and against are broadly in line with those cited by Workgroup No new arguments raised Good number and variety of respondents – no clear pattern of views by Party type P277: Consultation Responses Does P277 Better Facilitates Applicable BSC Objectives? YesNo 68

33 32 Workgroup recommends Implementation Date of: 28 Feb 13 if P277 is approved on or before 28 May Jun 13 if P277 is approved after 28 May 12 but on or before 27 Sep 12 Date driven by commissioning of East-West Interconnector Workgroup consulted on Implementation Date during Assessment Supported by respondents Implementation Date will form part of Report consultation P277: Implementation Date

34 33 Workgroup consulted on legal text during Assessment One comment received – the suggested amendment was made Workgroup prepared drafting for BSCPs 15, 31 & 65 and CRA SD during Assessment Not consulted on during Assessment Draft Code and CSD changes will form part of Report consultation P277: Legal Drafting

35 34 Workgroup has discharged its Terms of Reference Workgroup recommends that: P277 is rejected P277: Conclusions

36 35 NOTE Assessment Report; SUBMIT P277 to Report Phase; AGREE views on Applicable BSC Objectives (c), (d) and (e); AGREE provisional recommendation to: Reject P277; P277: Recommendations (1 of 2)

37 36 AGREE Implementation Date: 28 Feb 13 or 27 Jun 13; AGREE draft BSC legal text; AGREE draft changes to BSCPs 15, 31 & 65 and CRA SD; NOTE that ELEXON will issue Report Phase Consultation; and AGREE Draft Modification Report to April Panel meeting. P277: Recommendations (2 of 2)

38 195/06 P278 Treatment of Transmission Losses for Interconnector Users David Kemp 8 March 2012

39 38 BSC allocates transmission losses to Interconnector BM Units Anomalous in light of ITC Scheme Compensates TSOs for National losses caused by cross-border flows National Grid passes through compensation to generators and Suppliers through TNUoS Compensation can be positive or negative Interconnectors should not be subject to additional network charges GB arrangements need to comply with European legislation P278: Issue

40 39 Set TLM to 1 for Interconnector BM Units BSC to no longer adjust Interconnector BM Unit Metered Volumes for any GB transmission losses BSC would still allocate total GB transmission losses proportionally across all other types of BM Unit Interconnector BM Units account for 2% of losses Low materiality – volatility of losses can exceed this amount P278: Solution

41 40 Costs: Central costs: approx. £91k Party costs: IAs/IEAs: none Other Parties: up to £20k Ongoing impact on charges Impacts: Direct Impact: Interconnector Users and IEAs Indirect Impact: Other BSC Trading Parties SAA and BMRA BSC Section T SAA & BMRA SDs P278: Impacts and Costs

42 41 Workgroups majority view is to approve P278 Views based on Applicable BSC Objectives (a), (c) and (e) P278: Applicable BSC Objectives (1 of 4)

43 42 Concerns around transparency of the ITC Lack of publicly available information on the detailed ITC mechanism/calculation Intent of ITC seems inconsistent with actual mechanism Intent is to compensate for all cross-border flows Mechanism appears to only considers transit flows Is the solution cost-reflective? Is this the right solution? Some alternatives discussed Workgroup considered these more complex, and possibly non- compliant P278: Applicable BSC Objectives (2 of 4)

44 43 P278 is discriminatory, but due discrimination as required for compliance with European legislation Concluded that P278 most proportionate and appropriate solution Members have concerns about the ITC Scheme, but accept that it is legally binding P278: Applicable BSC Objectives (3 of 4)

45 44 P278: Applicable BSC Objectives (4 of 4) ABOYesNo (a)Majority: GB charges for Interconnector Users more transparently aligned with EC regulations Minority: Neutral – ITC regulations are ambiguous (c)Majority: Treats GB BMUs consistently with equivalent European arrangements Due discrimination to comply with wider regulations Minority: Not cost-reflective in pure-GB context ITC regulations ambiguous – could be viewed as undue discrimination (d)Majority: No Impact Minority: Not convinced change is required – implementing would add unnecessary complexity (e)Majority: Aligns arrangements with ITC and thus with Third Package Minority: Not convinced ITC wording requires this change

46 45 Majority of respondents agree with Workgroup One respondent unsure, cited reasons discussed by Workgroup P278: Consultation Responses Does P278 Better Facilitates Applicable BSC Objectives? YesNoOther 901

47 46 Workgroup recommends Implementation Date of: 1 Nov 12 if P278 is approved on or before 1 May Feb 13 if P278 is approved after 1 May 12 but on or before 28 Aug 12 Date driven by lead time for changes to central BSC Systems Materiality of losses is low – not necessary to align with Contract Round Workgroup consulted on Implementation Date during Assessment Supported by respondents Implementation Date will form part of Report consultation P278: Implementation Date

48 47 Workgroup consulted on legal text during Assessment No comments received Draft Code changes will form part of Report consultation P278: Legal Drafting

49 48 Workgroup has discharged its Terms of Reference Workgroup recommends that: P278 is approved P278: Conclusions

50 49 NOTE Assessment Report; SUBMIT P278 to Report Phase; AGREE views on Applicable BSC Objectives (a), (c), (d) and (e); AGREE provisional recommendation to: Approve P278; P278: Recommendations (1 of 2)

51 50 AGREE Implementation Date: 1 Nov 12 or 28 Feb 13; AGREE draft BSC legal text; NOTE that ELEXON will issue Report Phase Consultation; and AGREE Draft Modification Report to April Panel meeting. P278: Recommendations (2 of 2)

52 Minutes of Meeting 194 & Actions Arising BSC Panel Adam Richardson 8 March 2012

53 Chairmans Report BSC Panel Andrew Pinder 8 March 2012

54 ELEXON Report Victoria Moxham 8 March 2012

55 Smart Update BSC Panel Chris Rowell 09 February 2012

56 55 Smart Metering: Consultations DCC Prohibition Order DCC Licence DCC Licence Application Regulations Changes to existing Licences Consequential changes to existing Codes Smart Energy Code 23 Mar ? ? ? ? ? Minded to & Alternatives ____ Publicise the Consultation ____ Review BSC overlaps & gaps ____ Publish Response

57 56 Smarter Markets: Strategy Consultation 7 Mar Improving Market processes 5.Settlement Arrangements 6.Change of Supplier process 7.Data Processing & aggregation 8.Code Consolidation Enabling Retail Market Development 1.Time of use tariffs 2.Demand-side response 3.Energy Services 4.Payment Methods Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011) Workshop Settlement Workload Scope in Summer 14 Feb

58 57 Smarter Markets: Key themes in ELEXONs response Broad Support Keen to address settlement matters Need to integrate with existing settlement initiatives Need to prioritise propositions Need to group propositions Need a clear vision & timetable Opportunity for Code consolidation Dependency on Smart Metering?

59 58 Smart Budget Released Funds Spend this month (February) Committed Spend (to end March 2012) Smart Support £464k£84k£281k Smart Opportunities £36k£0£19k TOTAL £500k£84k£300k

60 59 Smart Metering: Consultations DCC Prohibition Order DCC Licence DCC Licence Application Regulations Changes to existing Licences Consequential changes to existing Codes Smart Energy Code 23 Mar ? ? ? ? ? Minded to & Alternatives ____ Publicise the Consultation ____ Review BSC overlaps & gaps ____ Publish Response

61 60 Smarter Markets: Strategy Consultation 7 Mar Improving Market processes 5.Settlement Arrangements 6.Change of Supplier process 7.Data Processing & aggregation 8.Code Consolidation Enabling Retail Market Development 1.Time of use tariffs 2.Demand-side response 3.Energy Services 4.Payment Methods Source: Ofgem Consultation - Promoting Smarter Energy Markets (15 Dec 2011) Workshop Settlement Workload Scope in Summer 14 Feb

62 61 Smarter Markets: Key themes in ELEXONs response Broad Support Keen to address settlement matters Need to integrate with existing settlement initiatives Need to prioritise propositions Need to group propositions Need to a clear vision & timetable Opportunity for Code consolidation Dependency on Smart Metering?

63 62 Smart Budget Released Funds Spend this month (February) Committed Spend (to end March 2012) Smart Support £464k£84k£281k Smart Opportunities £36k£0£19k TOTAL £500k£84k£300k

64 Distribution Report David Lane 8 March 2012

65 National Grid Update Ian Pashley 8 March 2012

66 European Update: Ofgem Jon Dixon 8 March 2012

67 195/07 Appointment of Panel Committee Chairman by the BSC Panel Adam Richardson 8 March 2012

68 67 The Panel is invited to: APPROVE the appointment of Roger Harris as the new ISG chairman with immediate effect; and APPROVE the appointment of Jonathan Priestley as the new Warm Homes Disputes Committee (WHDC) with immediate effect. Recommendations

69 195/08 BSC Audit Scope for the period 1 April 2012 to 31 March 2013 David Barber 8 March 2012

70 Only change: Re-introduce UMSOs, MAs and CVA MOAs to the scope No change to Materiality Threshold (1.5TWh) Panel are asked to delegate authority to PAB for any future changes to this scope, e.g.: Findings from the BSC Audit Publication of the Annual Performance Assurance Report (APAR) 195/08 Audit Scope Contents

71 Section H5 – Panel sets the scope of BSC Audit Panel is asked to approve the scope following endorsement by the PAB Following approval the scope document will be published on the ELEXON website This scope is for 2012/13 – BSC Auditor will perform its work in accordance with it in Spring /08 Background

72 The Panel is invited to: NOTE that the PAB has endorsed the BSC Audit Scope; APPROVE the BSC Audit Scope for 2012/2013; and AGREE to delegate responsibility for any future amendments to the BSC Audit Scope 2012/2013 to the PAB. 195/08 Recommendations

73 195/09 Approval to provide support to a BSC Partys participation in an Ofgem Low Carbon Network Fund trial Chris Allen 8 March 2012

74 73 LCNF Reminder LCNF: Low Carbon Network Fund First Tier: small projects - partial recovery of funding – up to £16million per year Running from 2010 to up to £500m - support to DNO sponsored projects - addressing new technology, operating & commercial arrangements Second Tier: flagship projects - annual competition for up to £64m per year ( projects £63m, projects £57m) Discretionary Award: successful completion & exceptional projects (up to £100m over the 5 years) NF%20brochure% pdf

75 74 Falcon Reminder

76 75 Modified application run by WPD or partner Modified DSO script run by NHHDAs Proposal Proposition: Can profiled annualised data for consumers be used for planning purposes as opposed to installing substation metering? EAC / AA data Modified NHHDA Application Modified SVAA Application Requires Licence Outside of BSC Systems BSC costs covered M?M?

77 76 The Panel is invited to: AGREE that ELEXON grant a limited non-exclusive licence to use and/or modify the NHHDA and or SVAA software for the purposes of Project Falcon only. NOTE that development of any software amendments will be funded by WPD. Recommendation

78 195/10 Continuous Acceptance Duration Limit and De-Minimis Acceptance Threshold Reviews Ian Scougal 8 March 2012

79 78 Last reviewed in 2010 ISG recommended no need for review at present Await possible Ofgem Significant Code Review Do we need CADL & DMAT Reviews

80 79 The Panel is invited to: AGREE that reviews of CADL and DMAT are not required at this time. Recommendations

81 195/11 Annual Credit Assessment Price (CAP) Process Review Ian Scougal 8 March 2012

82 81 The Panel is invited to: NOTE that the Credit Committee is not currently recommending any changes to the CAP review process; NOTE that ELEXON will carry a review of the reference price calculation; NOTE that the Credit Committee will recommend changes to the BSC Panel should it believe changes are appropriate in future; and NOTE the potential changes identified in this paper that could be made to the CAP review process. Recommendations

83 Any Other Business

84 Next Scheduled Meeting 12 April 2012

85


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